American Airlines Jet Loses Fuselage Panel, Continues from Dallas to Paris

Another airliner lost a chunk off its fuselage, this one an American Airlines flight from Dallas to Paris on April 20, it was learned today.

Shortly after the 767 took off from DFW, there was a loud noise that sounded like an explosion in the belly of the plane, a flight attendant said in an e-mail obtained by WFAA TV in Dallas, which broke the story.

Despite the first jolt and a subsequent one, the pilot continued on to Paris, nine hours away. American Airlines said the pilot acted properly. Some safety experts disagree, as you can see in the WFAA report. (Ignore the description of the 767 as a "jumbo jet," of course. It's just an older widebody.)

When the plane landed in Paris, a 2-by-3 foot panel was found to be missing from its belly.

This is the second time in six weeks that an airliner has been reported to have lost a piece of its fuselage in flight. See my post on March 28 about a US Airways 757 that lost a 5-by-7 foot panel that flew off the left wing and slammed into the fuselage at 27,000 feet, cracking an outer window, before landing safely (though with what the FAA later called significant damage), in Philadelphia.

###

Domestic Fare Hike XV

This is starting to sound like Super Bowl naming: Fare hike XV, the fifteenth, got underway last night.

And they're off! Delta breaks from the gate at the head of the field...

This update is from Rick Seaney at FareCompare.com:

***

By Rick Seaney

This evening Delta Air Lines initiated the 15^th attempted domestic airfare increase of 2008 by upping fuel charges an additional $20 roundtrip across the bulk of its route system.

The new total fuel surcharge on numerous Delta city pairs is now up to a record $130 roundtrip ($65 one-way) -- oddly enough the total of this fuel surcharge increase combined with taxes and fees is now larger than the actual base airfare on several short haul domestic flights.

With a backdrop of a slowing economy, I continue to look for a tipping point where domestic air travelers begin to significantly push back on record high airline ticket prices. At best the jury is still out on whether we are seeing the first signs of push back (see conflicting reports below), what is abundantly clear however is that legacy airlines are willing to cut back even more capacity as we near this point:

• Travelocity says summer demand is strong (http://www.bizjournals.com/baltimore/stories/2008/05/05/daily30.html)
• Orbitz says domestic bookings are weak (http://www.chicagobusiness.com/cgi-bin/news.pl?id=29334)
• Airlines show significant drop in April domestic traffic (more than can be accounted for by Easter in March) (http://www.bloomberg.com/apps/news?pid=20601103&sid=agnAGzDFb4aM&refer=us )

I had predicted at least 2 more increases in May and nothing has changed recently changed to alter this opinion – the torrid pace of airfare increases puts us on track for just shy of 40 increase attempts this year (compared to 23 last year) – while this total is unlikely, it is not inconceivable if oil cracks the $150 barrier and beyond.

In related airfare increase news tonight -- United Airlines increased airline ticket prices between the U.S and Canada by $86 to $129 roundtrip.

I have updated our 2008 domestic airfare hike timeline as follows:

1. January 3^rd, initiated by United, $10 roundtrip, base airfare hike, successful

2. January 11^th, initiated by United, $30 roundtrip, fuel surcharge hike, unsuccessful

3. January 17^th, initiated by American, $20 roundtrip, fuel surcharge hike, unsuccessful

4. January 24^th, initiated by Continental, $20 roundtrip, fuel surcharge hike, successful

5. February 22^nd, initiated by United, $10 roundtrip, base airfare hike, successful

6. February 28^th, initiated by Delta, $10 roundtrip, base airfare hike, successful

7. March 7^th, initiated by United, $10 roundtrip, fuel surcharge hike, successful

8. March 14^th, initiated by United, $4-$50 roundtrip, base airfare hike, successful

9. March 19^th, initiated by Delta, $10 roundtrip, fuel surcharge hike, unsuccessful

10. March 27^th, initiated by Delta, $10 roundtrip, fuel surcharge hike, unsuccessful

11. April 9^th, initiated by United, $4-$30 roundtrip, base airfare hike, successful

12. April 15^th, initiated by United, $10-$20 roundtrip, fuel surcharge hike, successful

13. April 24^th, initiated by United, $4-$70 roundtrip, base airfare hike, successful

14. April 28^th, initiated by Delta, $10 and $40 roundtrip, fuel surcharge hike, successful

15. May 7^th, initiated by Delta, $20 roundtrip, fuel surcharge hike, pending

###

April in Paris ...

...was a lot cheaper than May, June, July and later are going to be. While we've been watching domestic fares skyrocket (I hate that cheesy media verb, but it's actually appropriate in this instance), airlines have been really piling on the fuel surcharges on international routes.

Here's an update from Tom Parsons at BestFares.com:

***

International Airfares Continue To Climb Sky High
As World Wide Airlines Raise Fuel Surcharges

Arlington, TX -- Wednesday, May 7, 2008 - "The cost to travel outside the United States is becoming more expensive due to special add-on fuel surcharges now being imposed by most US and international airlines across the globe" - says Tom Parsons CEO of Bestfares.com, the discount travel website that tracks airfares.

"On several international routes the fuel surcharge is actually higher than the base airfare" - says Parsons. The fuel surcharge compared to last summer on some routes has more then doubled. Parsons gives an example stating, "The base airfare price from Los Angeles to London for departure by May 25, 2008 is as low as $195 roundtrip and the fuel surcharge is $306 roundtrip."

This week we saw the price of oil hit over $122 per barrel. It's a traveler beware, as the cost of fuel continues to climb so will airfares. The cost of jet fuel has become the biggest expense for the airlines in recent years and this cost is now being passed on to the customer through fuel surcharges and higher ticket prices. We also expect to see more increases on domestic and international routes throughout 2008.

"As we enter the busy high-demand summer season, many travelers are seeking out airfares as low as last summer. We suggest that before you start searching on the internet that you take two aspirins to avoid ticket shock " - adds Parsons.

Listed below are the fuel surcharges charged by most major airlines that offer international service from the United States:

Destination	Summer 2007 Fuel Surcharge (Roundtrip)	Summer 2008 Fuel Surcharge (Roundtrip)	Fuel Surcharge Difference
Most European cities including Amsterdam, Athens, Madrid, Moscow, Paris, Prague and Rome	$150	$270	$120
United Kingdom (London, Manchester and Glasgow)	$130	$302	$172
Beijing, Manila and Tokyo	$180	$270	$90
Cairo, Egypt and Dubai, UAE	$160	$260	$100
Most German cities including Berlin, Frankfurt and Munich	$150	$210	$60
Hong Kong	$180	$270	$90
Honolulu	$18	$130	$112
Johannesburg	$150	$290	$140
Mumbai	$250	$350	$100
Rio de Janeiro	$56	$170	$114
San Jose, Costa Rica	$130	$250	$120
Santiago, Chile	$130	$310	$180
Sydney	$70	$230	$160
Tel Aviv	$112	$290	$178

###

Trouble in the VLJ World?

DayJet's quiet announcement (see yesterday's post) that it is laying off a portion of its work force (100 out of 260 employees, I am now told) and cutting back crucial expansion plans comes amid some apparent signs of disquiet at Eclipse Aviation, the Albuquerque , N.M. company that developed and is producing the $1.6 million Eclipse 500 very light jet.

The announcement was handled so softly that it barely gets mentioned in the mainstream media today.

I've always been amazed at the order figures Eclipse and DayJet, its major customer, have announced. DayJet, which has 28 Eclipse 500s in hand, is on the books for 239 firm orders and 70 options. Eclipse, founded by Vern Raburn, claims it has more than 2,600 firm orders. A total of 158 Eclipse 500s have been delivered.

The big question now is the validity of blue-sky claims about the potential of the very light jet industry. The FAA -- never one to shirk from predictions that enhance its importance as the regulator of the air lanes -- has said that 4,000 very light jets will be in the skies by 2015. In March, PMI Media published a forecast predicting that 7,659 very light jets will be delivered by 2016, which strikes me as a remarkably precise figure for a prediction.

This blog, Eclipse Aviation Critic NG , reports on trouble within Eclipse.

Eclipse apparently is concerned. The Albuquerque Journal, the hometown newspaper, reported on April 22 that Eclipse "has asked a California court to force the unmasking of anonymous commentators who posted on Web sites covering the company."

The Albuquerque paper said that a subpoena was issued by a California Superior Court in Santa Clara County ordering Google to "provide names, addresses and other information for about 28 commentators" to the blog.

Meanwhile, the Atlantic magazine is out this month with a hagiography on DayJet and Eclipse by Jim Fallows, who's been writing trenchantly for many years about aviation alternatives, but who may have been caught out (damned magazine lead times!) too far in front of a story that may be banking steeply.

###

DayJet, Unable to Raise New Money, Cuts Growth Plan and Reduces Work Force

Hammered by the credit crunch, DayJet said this afternoon that is reducing growth plans and cutting its work force. It didn't provide specific details, except to say that it was unable to raise $40 million in needs to continue growth.

DayJet, the first company to enter the so-called air-taxi business using jets, is the biggest customer for the Eclipse 500 very light jet. Based in Boca Raton, Fla., DayJet began flying last summer, offering on-demand, per-seat transportation. Its initial routes were medium-sized cities in Florida, but the founder, Ed Iocabucci, said that the company's future depended on expansion into regional flying throughout the Southeast to airports that it calls DayPorts.

DayJet has taken delivery of 28 Eclipse 500 jets, which cost about $1.6 million each, said Alana McCarrher, an Eclipse spokeswoman. Eclipse says it has a total of over 2,600 orders for the jets, 158 of which have been delivered to customers.

Including the 28 it has received, DayJet made 239 orders for Eclipse 500s, with an additional 70 options.

In a statement today announcing the cutbacks, Iocabucci said (excerpts follow):

---"Effective this week, we have made the difficult decision to scale back DayJet’s 2008 growth plan. Because of this change in strategy, the company has reduced its employee base across most areas of its business. ... These changes were caused by external economic factors and are not a reflection of a weakness in the underlying DayJet business model."

--"Our first phase of operations, the "Proof of Concept" phase, has gone exceptionally well. Response ... was very consistent with our expectations and we answered many nagging questions: Yes, customers will fly in a small jet; Yes, customers will embrace the per-seat model; Yes, customers will pay a premium for tangible value; Yes, the technology works as planned ... All in all, we have signed over 1,500 members, more than 550 of which are active travelers, and nearly 200 are frequent flyers."

---"[This] is only the first step to profitability. The next step is equally important -- growing the network to a density that generates operating margin. Our projections have always indicated a network of 30-50 "line" aircraft serving 20-30 fully developed DayPort markets was needed to reach critical scale. More importantly, this required a $40M infusion of operating capital in the first quarter of 2008. ... given the current state of the U.S. capital markets, the timing of our planned financing could not have been worse."

---"Without the growth capital required to open new markets, the company must scale back to a size that is consistent with the demand ... DayJet’s business model is based on operating at a critical mass, requiring investment ahead of growth. We hired and trained a number of employees in anticipation of future growth and always planned for additional capital investment at this stage. "

---[This] will not reduce our existing service region. ... We will continue to operate and expand our service (albeit at a slower rate) to communities across the Southeast ... when the capital markets recover, then we would expect to resume the growth forecast in our original plan."

###

Upstairs, Downstairs

...Or a Tale of Two Cities, pick your allusion.

British Airways today reported that its passenger load factor fell 5.1 points in April, to 71.6 percent, compared with April of last year.

The Easter holiday falling in March of this year had some effect overall, but in general, BA said the basic problem is a decline in long-haul coach traffic, even as business-class and first-class traffic continues growing.

Coach traffic fell 8.8 percent in April, while premium traffic rose 3.4 percent, British Airways said.

Looking at airline performance in general for April, it's increasingly clear that the class-divide in the air-travel market is becoming more pronounced, as is the divide between domestic and international service. That is going to become extremely apparent this summer, as the network carriers continue shrinking domestic routes and concentrating on lucrative international routes (and those domestic routes that feed international traffic).

In a general assessment of what's ahead, I thought Delta's president, Edward H. Bastian, was pretty clear at the JPMorgan aviation and transportation conference in March (which occurred before the Delta-Northwest merger announcement).

Here are some excerpts from his comments that describe what is going on with some clarity through Delta's prism:

--"International growth is the core, the foundation and cornerstone" of Delta's future. "Internationally, we are go to be growing at roughly 15 percent pace in 2008 over 2007."

--"The good thing for us about the international growth is that a considerable amount of it is being funded out of the domestic system."

--"Forty-one percent of our capacity this summer will be flying internationally."

--Some of this domestic capacity reduction will be accomplished by pro-active "day-of-the-week cancellations, as well as holidays."

--This summer, Delta's schedule for international flying will be "up over 77 percent [while] domestic is down greater than 22 percent."

--"We're going to be continuing to rationalize, on the domestic side, point-to-point flying." [My note: That describes many routes that do not feed into hub connections that yield international passengers, and portends further reductions in service at many smaller airports.] "The domestic reductions I mentioned earlier are largely going to be come out of point-to-point flying domestically. We're going to be continuing the strength of our hubs [but] our point-to-point network domestically is subject to rationalization. "

--"Domestic capacity is increasingly being pointed toward feeding international destinations."

--This pronounced trend can be described metaphorically, Bastian said, as "the tale of two cities."

###

Eos's Fate and Silverjet's Dilemma

[Above: The new all-business-class configuration on Singapore Airlines' A340-500s]


I've been hearing from people who say they loved Eos Airlines and can't understand why it failed, given its terrific in-cabin performance as an all-business-class airline whose product surpassed some airlines' first-class service.

Furthermore, it has been noted, other airlines seem to be optimistic about all-business-class service. In fact, Singapore Airlines is making one of the biggest moves ever into all-business-class flying by a major airline. In mid-May, Singapore will start all-business-class flights nonstop between Newark and Singapore a couple of times a week, and ramp them up to daily by summer. In September, Singapore is expanding the all-business-class service to Los Angeles-Singapore nonstop, again with a plan to ramp up quickly to daily flights.

And Lufthansa is also expanding its boutique all-business-class service, operated by PrivatAir, with flights between Germany and Dubai and India.

So what happened to Eos?

Brutally simple. Eos, flying used 757s, had a cost structure that required its planes (with 48 seats) to fly about 70 percent full, with average fares of about $3,500, to be profitable.

Though it had expansion plans, Eos flew a limited route, New York-London Stansted. On that route (especially with Stansted in the equation), it was heavily dependent on the banking and investment business -- not just in New York but, perhaps more importantly, in London. Remember, the plane flies both ways, and transatlantic traffic originating in London had become increasingly important, especially with the weak dollar.

Lawrence Hunt, the affable and indefatigable founder of Silverjet, has been frantically raising cash since the airline launched early last year. The most recent score was from Middle East investors, who bought a 28 percent stake in Silverjet last week. Hunt says that will help finance a planned aggressive expansion in the Middle East and Africa.

Meanwhile, though, Silverjet is struggling on its Newark-London route, and the challenge is made tougher the fact that Silverjet's London base is the not-so-convenient London Luton Airport.

[Silverjet reported today that it had a 67 percent load factor in April and said it expects that the load factor and yields will “show further improvement in May.]

Skeptics are perched on the trees waiting, but Hunt thinks Silverjet can ride it out, assuming additional financing, because he has hammered the break-even point down enough so that the current average fare of about $2,100 roundtrip will do the trick, assuming loads over 70 percent.

The major U.S. airlines in the New York-London market helped kill off Eos by cutting negotiated business-class fares -- the ones they offer their top corporate customers -- down to the Eos level. American Airlines even threw a new flight from New York into Stansted last October (and announced a second one to come) and was said to be discounting some business-class fares down to the $3,000 roundtrip range.

Meanwhile, British Airways introduced a murderously cheap advance-purchase (62 days) business-class fare of about $2,500 round-trip between Kennedy and Heathrow, and later extended into mid-May -- pretty well covering the business-travel season to the summer lull.

Eos just couldn't compete as the majors kept slashing business-class fares (which had been going for about $9,000 roundtrip, walk-up)

At the end, "Eos's pricing was very similar to Continental, British Airways, American and Virgin Atlantic," said Silverjet's Hunt.

And "with only 48 seats on a 757, the economics were similar to Silverjet's 767s in terms of operating costs," he said. Silverjet runs its 767s with 100 seats.

Given that, plus the transatlantic fare war, Hunt said. "It was very hard for them to offer a price advantage. Eighty percent of their business came from banks and financial services, and those guys started getting deals with Continental and American and Delta in the $3,500-$4,000 range."

Optimistically, Hunt said, "It's going to be a very tough 2-3 years. It was very important for us to get our price point to the $2,000 level where the majors can't compete with us."

As to investors, Hunt said it's been exceedingly difficult to raise money.

"The British institutional investors have got their own problems. For example, one of our largest shareholders was the second-largest shareholder in a bank called Northern Rock that got bought by the government because it nearly went bust. So they had to sell everything -- and we have lots of shareholders in that situation. We've got a big property fund that's invested in us that's 80 percent leveraged. They're not sure whether they can make it or not, and they're selling everything they can to raise cash. So we need to find a different type of investor going forward," he said.

Here's the rest of what he told me in a recent interview:

"Also, we have a pretty tough regulatory environment, from a capital and liquidity point of view,
so you never know what the regulators are going to do.

"We're almost at a cash break-even now. Our planes are going to be nearly 60 to 70 percent full this summer. We're doing okay, but I'm not pretending we're out of the woods yet.

"How many people said I'd never get this off the ground? How many said we'd never raise the money? How many said we wouldn't fill the planes because people wouldn't fly to Luton? If I'd listened to all those people I wouldn't be here now."


###

The Kentucky Derby: They Kill Horses, Don't They

The predictable romantic press twaddle and television rhapsodizing accompanied the running of the Kentucky Derby today.

But as the squadrons of private jets take off from Louisville to disperse the well-heeled fans back home, again the ugly truth about three-year-old thoroughbred racing (and breeding) is glossed over, because it doesn't comport with the media narrative and the commercial interests intertwined with it.

The horse that finished second, a filly named Eight Belles, broke down after the finish line -- compound fractures in two ankles -- and had to be killed (let's avoid the word "euthanized") on the track.

Presumably, the 157,000 party-goers in attendance collectively averted their eyes.

Without doubt, the craven NBC TV sports announcers at Churchill Downs did so. Even after the winning horse spooked at the collapsed Eight Belles and threw his jockey on the track, the NBC announcers prattled on merrily, ignoring the obvious until they were forced to acknowledge it briefly before moving back onto narrative and the winner's circle palaver.

Anyone who knows horses knows that that filly probably ran at least a few furlongs of that race on at least one fractured leg. It was in her nature not to quit.

These horses are far too delicately bred to start with -- and most of them are babies, not chronologically three years old, when they're forced into intensely competitive racing. Their bones and muscles are still not fully developed.

All they know is to run like hell. Which they do, with magnificence.

These horses are still too young, in early May of their second year, to race in a dense pack in the kind of intense conditions demanded at Churchill Downs. The Kentucky Derby might be a great party and spectacle, but it's an animal-welfare ethical disgrace, as is the entire Triple Crown and thoroughred-breeding apparatus.

There's nothing wrong with racing fully grown horses, assuming the horse knows what the deal is and goes along. Horses love to run. They even love to run with someone on their backs. But two-and-a-half years -- which is how old these horses actually are -- is too early to run them at that level, under those conditions. They need another year or more to develop, and even then they're still young and overbred.

Sports writers spend an awful lot of time flapping around about things like steroid use in baseball. It's time they started questioning assumptions about the races of the Triple Crown and the systemic animal abuse -- much of which occurs long before the dewey-eyed fans warble the atrocious "My Old Kentucky Home" at Churchill Downs -- that's behind all that excitement.

Most sports writers, of course, are known for this: Writing the same crap over and over, till the last syllable of recorded time, while stuffing themselves with free shrimp in the press lounge.

In Sunday's New York Daily News, then, we have this unconscionable passage quoting the dead horse's trainer, Larry Jones:

"Trainer Larry Jones said, 'She went out in a blaze of glory,' as he tried to hold back tears from his reddening eyes.

Sorry to hear of the trainer's reddening eyes. But she did not go out in a "blaze of glory." She is a horse. She went out in hideous pain, unable to understand why her legs gave out when all she was doing was running like hell. She went out in the back of a truck.

Are they going to bring out any more shrimp, do you think?

It is time to say enough.

"How many times do we have to see this?" said my wife Nancy, who knows horses. She said this: Racing raw, so-called three-year-olds in an arena massed with bellowing people and startling visual impressions, within a pack of horses that don't know each other -- the field is not a natural herd; it's a hastily assembled mob -- is simply "preying on their instincts to flee."

In the Washington Post, Sally Jenkins has it just right.

In the Times, William C. Rhoden's Sunday column also gets it. "The sport is at least as inhumane as greyhound racing and only a couple of steps removed from animal fighting," Rhoden says. "This is bullfighting."

But these are two lonely voices against the prevailing media-trumpet chorale of glorious tragedy: The brave filly who wouldn't quit, who ran on through shattering pain and managed to place in parimutuel paradise.

Can't you hear the stirring theme music?

Meanwhile, Chelokee, the colt who was badly injured just yesterday in Alysheba Stakes during the Kentucky Oaks races at Churchill Downs, was battling for survival.

Chelokee was trained by Michael Matz, who also trained Barbaro, the 2006 Kentucky Derby winner. Barbaro, you'll recall, shattered his leg two weeks later in the second 2006 Triple Crown race, the Preakness, and eventually had to be put down.

And these, remember, are just the famous horses that make the news.

Except, of course, on NBC.

###

United Pilots, Acting Really Mean, Say US Air and United's Boss BOTH Suck

The preparations for the Airline Spring Prom (this year's theme: "Off We Go Into the Wild Blue Yonder!") are turning really really mean.

First Continental told United it would not be seen dead in its company, thank you very much. That was mean. Now the pilots at United Airlines are saying they think US Airways is a big looooser.

Here's what the United Airlines council of the Air Line Pilots Association says today. Really, they are making no effort whatsoever to be nice.

Just yesterday, the entire Air Line Pilots Association, representing 56,000 pilots at 41 airlines in the U.S. and Canada, put out a separate mean statement quoting the United union leader saying the United boss, Glenn Tilton, is a big loooooser making a "shameful grab" for his "obscene compensation" ($10.3 million) while producing "abysmal numbers and operational deficiencies" at United.

Kids, kids! Can't we just "slip the surly bonds of earth" and just keep raising fares and GET ALONG, gosh darn it all?!

###

Delta, United Take Another Hike; the Rest Are Sure to Follow

Delta and United slapped in still another price hike yesterday, in the form of fuel surcharges.

Can the rest of the unindicted co-conspirators major airlines be far behind?

Here’s last night’s report, and running update on the fare increases (including fare increases and fuel-charge increases) this year, by Rick Seaney of FareCompare.com:

***

By Rick Seaney:

“Tonight at 8:00pm EDT, United Airlines matched the Delta Air Lines initiated airfare hike early in the day on the bulk of its route system – the hike – in the form of a fuel surcharge – is either an additional $10 or $40 roundtrip depending on the type of airfare and city pair.

“This leaves four remaining legacy airlines yet to match , including American, Continental, Northwest and US Airways.

“I have been asked to update our airfare increase timeline, noting whether the hike was base airfare or fuel surcharge related which I have done below. Effectively to an end-consumer there is not difference a hike of the base airfare or fuel surcharge as the two are combined and sales tax applied (not broken out separately on domestic airline tickets). That said there is a not so subtle difference for corporations that have negotiated airfare discounts – these discounts are only applied to the base airfare and not the fuel surcharge which reduces the overall effectiveness of these contracts.

“Our updated 2008 Increase Timeline follows:

1. January 3^rd, initiated by United, $10 roundtrip, base airfare hike, successful (sticky)

2. January 11^th, initiated by United, $30 roundtrip, fuel surcharge hike, unsuccessful

3. January 17^th, initiated by American, $20 roundtrip, fuel surcharge hike, unsuccessful

4. January 24^th, initiated by Continental, $20 roundtrip, fuel surcharge hike, successful (sticky)

5. February 22^nd, initiated by United, $10 roundtrip, base airfare hike, successful (sticky)

6. February 28^th, initiated by Delta, $10 roundtrip, base airfare hike, successful (sticky)

7. March 7^th, initiated by United, $10 roundtrip, fuel surcharge hike, successful (sticky)

8. March 14^th, initiated by United, $4-$50 roundtrip, base airfare hike, successful (sticky)

9. March 19^th, initiated by Delta, $10 roundtrip, fuel surcharge hike, unsuccessful

10. March 27^th, initiated by Delta, $10 roundtrip, fuel surcharge hike, unsuccessful

11. April 9^th, initiated by United, $4-$30 roundtrip, base airfare hike, successful (sticky)

12. April 15^th, initiated by United, $10-$20 roundtrip, fuel surcharge hike, successful (sticky)

13. April 24^th, initiated by United, $4-$70 roundtrip, base airfare hike, successful (sticky)

14. April 28^th, initiated by Delta, $10 and $40 roundtrip, fuel surcharge hike, pending

“Note that I have closed out the 13^th hike of last week with a notation that it was widely successful.”

###

Stick 'Em Up!

Yikes, another week, another fare hike is in place! This time, the unindicted co-conspirators six network airlines didn't even bother to build in a few days before they all fell into lockstep.

Not that the airlines are colluding or anything as they fix match fares. That would be wrong.

Tom Parsons of BestFares.com has the latest information on the 10th airline price -heist hike this year:

***

From Tom Parsons:

"On Thursday, April 24, United Airlines raised domestic airfares by 3 to 5 percent, primarily on markets where they do not compete with low-cost carriers. The majority of routes saw a 5 percent increase.

"On Friday, American Airlines, Continental Airlines and Delta Air Lines quickly matched the United airfare hike. Saturday, Northwest and US Airways, the final two holdouts among the major legacy airlines, matched the airfare increase.

"'This is the tenth airfare hike we have seen from the major airlines since December 20, 2007, and the ninth increase since January 7, 2008' - says Tom Parsons, CEO and founder of Bestfares.com, an internet travel website that tracks airfare changes and travel industry trends.

"Today, the average fuel surcharge, which has been raised four times since December 20, is $70 roundtrip. This fuel surcharge applies to both short haul and long haul flights. The major airlines have also raised leisure airfares six times since January 7, 2008.

"Of the recent airfare hikes, the first five were by flat dollar amounts, such as $10 or $20 roundtrip. On March 14, United raised airfares as little as $10 roundtrip on short haul flights of 500 miles or less one way to as much as $50 roundtrip for long haul flights that exceeded 1,500 miles one way.

"The new airfare hike that took place this past weekend added a new twist by raising some airfares by 3 percent, but the majority of increases were by 5 percent on the base airfare. The ten airfare hikes that have taken place since December 20, 2007, have primarily affected routes not served by a low-cost airline.

"'In just four short months, leisure travelers purchasing roundtrip tickets, especially on flights over 1,500 air miles one way, could be paying as much as $220 roundtrip more than they did between the same two destinations back in December' - states Parsons. One example is Newark to Fresno (CA), a cross-country route not served by a low-cost carrier. On December 18, 2007, the lowest published leisure airfare on this route on Continental was $760 roundtrip. Today, Continental charges $973 roundtrip for this route, an increase of $213 roundtrip.

"Another example is Savannah (GA) to Portland (OR). On December 18, 2007, the lowest published airfare was $650 roundtrip on Delta. Today, the lowest published airfare on this route is $878 roundtrip, an increase of $228 roundtrip.

"One of the highest airfares in America on a non-competitive route based on cost-per-mile is from San Francisco to Sacramento, which is a distance of 86 air miles each way or 172 air miles roundtrip. The lowest leisure airfare on both United and US Airways for this route is a whopping $686 roundtrip. That's $3.98 per mile. The walk-up fare (Y class) on this route is $1,510 roundtrip, or a cost of $8.77 per mile flown.

"One of the lowest airfares in America on a cost-per-mile basis is also from San Francisco. San Francisco to Las Vegas, where United and US Airways must compete with low-cost carriers Virgin America and Southwest Airlines, is a distance of 830 air miles roundtrip. On this route, all four airlines offer a roundtrip leisure airfare of $88 roundtrip, or a cost of 10.6 cents per mile. Southwest's walk-up fare (Y class) is $153 one-way or $306 roundtrip, or 36.9 cents per mile.

"'As major airlines continue to lose billions of dollars and as the cost of fuel continues to climb, leisure and business travelers should expect to see even more airfare hikes in the very near future, especially on non-competitive routes' - adds Parsons.

"Since December 20, 2007, the major airlines have now attempted to raise airfares and fuel surcharges 14 different times. Ten have stuck so far."

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United: Yoo Hoo, US Air?

Whoa, did Continental Airlines totally diss United Airlines yesterday or what? I mean, it was one thing to tell United to get lost. But, as you can see from their joint statement linked here yesterday, Continental CEO Larry Kellner and president Jeff Smisek said that the need to protect Continental's "significant cultural, operational and financial strengths" finally won out in the decision not to merge with United.

Was the well-run Continental basically telling the not-so-well run United that they stink?

Anyway, United has sucked it up and is looking for somebody else to take to the prom, specifically US Air, according to this report from Reuters -- which, by the way, has become this country's most reliable and heads-up wire service in my opinion.

Meanwhile, United CEO Glenn Tilton issued this statement: "Our strategy is consistent. Consolidation is underway -- ensuring you have the right partner is everything. We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders and benefit our employees and customers."

So there.

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Continental: No Merger Now, And We May Leave SkyTeam

Continental Airlines said today that it chooses "to not merge with another airline at this time."

Continental also said it is "considering alternatives to SkyTeam" and evaluating other global airline alliances.

Here's the statement Continental sent to its workers and released publicly.

Continental is now weighing some kind of a new alliance with British Airways and/or American Airlines, under the kind of anti-trust immunity on certain markets that the government has handed out freely to Delta-Air France KLM and Northwest-Air France KLM. These arrangements are a kind of quasi-merger on certain select (read: intrernational and international-feed) markets.

The statement obviously means that Continental's hot-and-heavy negotiations with United Airlines have collapsed -- and is evidence that Continental did the collapsing, once they had a good look at what a mess United is in.

Now United needs to find someone else to take to the dance. Yoo-hoo! US Airways? Anyone?

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Eos Airlines Shuts Down

[The Eos all-business-class cabin]


Oil prices and the credit crunch take out another one: Eos Airlines is abruptly shutting down today. Here's the announcement.

Eos operated at the top end of the all-business-class niche, using 757s configured with just 48 lie-flat seats to fly between Kennedy airport in New York and London Stansted Airport.

It's the second of the all-business-class startups to go out of business. MaxJet ceased operations last December.

On Dec. 24, when MaxJet folded, Eos issued a statement saying it was doing very well. "Industry failures, rising oil prices, a weakened economy and planned reductions in corporate travel have neither diminished travelers' enthusiasm for Eos ... nor hindered the company's march toward becoming an unqualified business success," that statement said.

Eos had 44 weekly flights between Kennedy and London Stansted, and was planning an ambitious expansion.

As part of that expansion, Eos had announced an additional daily route between Stansted and Newark that was scheduled to start May 5. Eos had also announced a new route between London and Dubai starting July 6.

Here’s the bankruptcy court filing Eos made yesterday.

eos-bankruptcy-filing.pdf

Note that the Chapter 11 bankruptcy filing shows $70.2 million in assets and $34.8 million in debts. That's hardly a balance sheet for desperation -- unless you're looking down the road and seeing very bad news lurking right around the corner.

The bankruptcy filing also notes that there are between 1,000 and 5,000 (unsecured) creditors.

But at the very end of the filing, after all those "whereas's" and "resolved's," the top 20 unsecured creditors are listed. The biggest unsecured claim in the top 20 is $744,000 and the smallest is $127,594 -- for a total of about $5.7 million. So there's a long way to go to get to the $34.8 million in debts claimed. My guess is that somehow, some people who bought tickets and hadn't flown yet are being counted as unsecured creditors -- though that still couldn't add up to anywhere near $34.8 million. And it would seem that the ticket dough in hand could also be regarded as an asset.

It's a curiosity, having twice the claimed assets as debts and filing for bankruptcy -- while at the same time maintaining, as Eos does, that it has no intention of continuing operations. (Or at least, commercial airline operations).

As usual, there is a need to look hard at airline numbers.

Anyway, here's some Wikipedia background on Eos.

Meanwhile, Silverjet, the all-business-class startup that flies 767s between Newark and London Luton airport, is offering to accommodate some Eos passengers.

Silverjet's own status is uncertain, although the airline insists its passenger loads are satisfactory.

Silverjet founder and CEO Lawrence Hunt tells me today that a "fundamental problem" Eos had was that it wasn't able to offer a "price advantage," once major-airline competitors like Delta, American and Continental brought transatlantic business class discounts down to Eos's level in the $3,500 to $4,000 round-trip range. Silverjet's roundtrip fares average around $2,000, he said.

The famously aggressively competitive American Airlines also hit Eos hard when it started a New York flight to and from Stansted last October, and added a second one last month, at negotiated fares that were undercutting Eos prices.

Hunt said that Silverjet has been in talks with several buyout "investment companies," none of whom are airlines.

"We get approaches all the time. A couple of them are quite serious in the last couple of months, but there's nothing to announce yet," he said. "Since the markets turned last year we've been looking for a long-term strategic investor who would continue to finance our expansion."

He added, "The fuel price obviously is hurting everybody, including us, and the general economic climate is not great" on the hotly competitive transatlantic routes. The Dubai route, he said, continues to do well.

Among Silverjet's current investors are the Reuben brothers, the billionaire London entrepreneurs, who have lent the airline over $20 million.

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The Morning News: 'Ten Hut!

Everything you need to know about the profoundly embarrassing spectacle that is the annual White House Correspondents Dinner -- and the related Tragic Decline of Our Republic -- is embodied in this red-carpet photo of arrivals to the dinner in Washington last night.

In the above photo, that's General James Conway, the Commandant of the United States Marine Corps, looking like he's dashing off to a drum & bugle corps competition, accompanied by what appear to be an amazingly spry Jayne Mansfield, along with Gidget's mom.

And yes, I did say Commandant of the United States Marine Corps.

And cut out that damn giggling. Don't you know there's a war on?

***

O'Hare Messed Up

That's an all-purpose headline I'll save for regular use as the "it's snowing" excuse gives way to the "it's raining" excuse for massive delays and cancellations at Chicago O'Hare. Or fill in the blank with your favorite major airport.

Last night, the always-nimble Associated Press reports, "more than 30" flights were canceled at O'Hare because of thunderstorms.

Wait. Let me put on my reading specs for a minute. Hmmmm. It says here at FlightStats.com that there were 421 flights canceled yesterday during the afternoon and evening at O'Hare. As usual, the AP has got the scoop, because 421 canceled flights is definitely "more than 30."

By dinnertime yesterday, O'Hare flights were running at an on-time rate of less than 10 percent. And O'Hare is still messed up today, though it's merely partly cloudy in Chicago.

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Everybody's On Board With New Fare Hike

Sealing the deal on the latest round of fare increases, Northwest Airlines matched the across the board increases of 3 to 5 percent initiated by United Airlines and followed by Delta, American, Continental and US Airways.

And showing that some airlines simply cannot issue a statement without obfuscation, Northwest said: "The fare increase comes on the heels of this weeks’ [sic] 1Q earnings report, showing Northwest Airlines lost $4.1 billion."

In fact, Northwest "lost" $191 million in the first quarter, if by "lost" you mean "no longer actually has this specific sum of money in its wallet."

The rest of the alleged dough, adding up to that $4.1 billion, comes from an airy accounting adjustment that reflects what Northwest says is a decline in its perceived value. The $191 million is real money on anybody's block. But the rest of the $3.9 billion-and-change is basically Monopoly money, a red-ink herring to make the plight of the airline -- certainly bad enough -- look even worse.

Delta Air Lines, Northwest's soon-to-be acquirer, used the same tactic -- and in fact the identical language about a "non-cash goodwill-impairment" charge -- in its first-quarter earnings report this week, claiming a "loss" of $6.4 billion on an actual operating loss of $274 million.

I'm happy to see the serious media have not let this accounting ploy settle into the record, and are using the operating losses as the appropriate figure.

As I keep saying, we all need to look hard at the real numbers as the airline industry wails and moans and falls to its knees begging and pleading for relief in Washington. Yes, they are having a very rough time of it. But let's keep the math in perspective as the industry consolidates, as it is rapidly doing.

Meanwhile, I see in the Times today that Continental -- which in my opinion is the best of the lot among the major airlines -- is using its Web site to prepare its customers for a merger announcement with United that is expected within a week. I like the fact that Continental isn't being coy. I don't like the fact that my meager but valued and long-held elite-status toehold in OnePass is about to be subsumed into a mega-airline. This cannot be good, I think.

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The Morning News: A New Fare Hike, and Other Sad Tidings

—Encouraged, no doubt, by incessant media stories that accept at face value the proposition floated by airline executives that substantial fare hikes are necessary for survival, the unindicted co-conspirators major airlines are falling into lockstep on the latest round of fare increases.

Not that they’re colluding of course. That would be illegal, and we all know how sternly the current Justice Department looks upon shady corporate behavior.

Anyway, Rick Seaney of FareCompare.com, sends an update this morning on the new round of fare hikes initiated yesterday by United Airlines. Last night, both American and Delta matched it, raising fares by 2 to 5 percent “across the bulk” of their routes, Rick says.

The new fare-hike will be the ninth successive fare increase (not counting increases in fuel surcharges) this year — once all of the competitors match it, as they probably will later today.

[Update 3 p.m.]: From Rick Seaney: "Continental Airlines matched the United initiated increase of 2% to 5% ($6 to $80 roundtrip) across the bulk of its route system. Additionally US Airways has matched across approximately 35% of its route system from 2% to 4%.

(Meanwhile), "American continued to firm up, matching in markets it left out last night ... Frontier partially matched on some of their routes ... Northwest has some minor increase-matching (less than 10% of their routes). ... This leaves Northwest, who has typically been one of the last to match in past increases attempts -- along with a major portion of the US Airways route system – yet to match."

***

—The latest mass hysteria: Food Hoarding by People Who Have No Conceivable Reason to Stockpile Food, Encouraged by the Media. And I was planning to go to Costco today. No way now. I’ll gnaw on that old celery rather than have agita facing that marauding horde.

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United Initiates New Fare Hike

Here we go again.

From Rick Seaney, the CEO of FareCompare.com (and please note his advice about locking in fares for summer travel now, if you possibly can):

Rick writes:

"At noon today United Airlines initiated the thirteenth attempted domestic airfare hike of 2008 – eight of the previous twelve had been widely successful.

United raised airfares across the bulk of its domestic route system in a laddered fashion from $4-$60 round-trip for leisure travelers in over 5,500 city pairs and $4-$70 for business travelers in over 9,000 city pairs.

A quick check of city pair with increases shows that the laddered hike does not closely follow flight distance as many city pairs less than 500 miles apart have a $20 or more increase round-trip. Our software shows over 20 different price increase levels in the $4-$70 range – the most we have recorded for a laddered increase which almost always has only a few price levels.

United by far has been the most active instigator of airfare increases in 2008, initiating 8 of the 13 airfare increase attempts this year – making one wonder how they racked up such a huge loss in the first quarter – certainly it wasn’t for lack of trying to increase airfares.

I found it a bit ironic the other day when the CEO of Delta “called” for airlines to raise airfares across the board by 15 to 20 percent to offset fuel costs – in days gone by there had been much ado about signaling between the “back rooms” of airlines on price hikes – now this “signaling” is apparently done via press release…

To fulfill the wishes of the Delta CEO, he needs a lot of cooperation from the other legacy airlines which means we may be in for several more active weeks of increases including the one today by United Airlines.

Unfortunately for air travel consumers this 13^th increase of 2008 puts us on pace for just under 40 increase attempts this year compared to a total 23 increase attempts (17 widely successful) in 2007 ( by far the most in 3 years prior to 2007)..

I have updated our 2008 airfare hike timeline as follows:

1.---January 3^rd, initiated by United, $10 roundtrip, successful (sticky)

2. ---January 11^th, initiated by United, $30 roundtrip, unsuccessful

3. ---January 17^th, initiated by American, $20 roundtrip, unsuccessful

4. 4. January 24^th, initiated by Continental, $20 roundtrip, successful (sticky)

5. ---February 22^nd, initiated by United, $10 roundtrip, successful (sticky)

6. ---February 28^th, initiated by Delta, $10 roundtrip, successful (sticky)

7. ---March 7^th, initiated by United, $10 roundtrip, successful (sticky)

8. ---March 14^th, initiated by United, $4-$50 roundtrip, successful (sticky)

9. ---March 19^th, initiated by Delta, $10 roundtrip, unsuccessful

10.---March 27^th, initiated by Delta, $10 roundtrip, unsuccessful

11--- April 9^th, initiated by United, $4-$30 roundtrip, successful (sticky)

12.---April 15^th, initiated by United, $10-$20 roundtrip, successful (sticky)

13.---April 24^th, initiated by United, $4-$70, pending

United has had the most success in getting other legacy airlines to come along with increases when it has laddered the increases, instead of trying to instigate an across the board $10 or $20 hike – I would suspect we will quickly see some matching by the end of the day tomorrow from other legacy airlines.

I again cannot stress enough that consumers should lock in their summer airline travel as quickly as possible, seats are going to start to get scarce and the prices are going to reflect the summer supply and demand.

I will update on any major matching or rollback activity as it occurs." (Rick Seaney)

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Weather Seen As Delay Factor. This Is News?

Here's an odd little study of the sort that often gets a lot of credulous media attention. It asserts that weather is the cause of most flight delays.

Well, weather is the attributed cause. But, duh, we've always had weather. Weather alone doesn't explain why three out of ten flights are delayed -- even as airlines build copious slack into their flight schedules to give that airplane lots and lots more time than it actually needs to try to get there without officially being marked as delayed.

An obsolete F.A.A. flight-control system is the primary reason for mounting delays. And a fix is many years off, even assuming the F.A.A. gets its act together under a new administration in Washington. So ok by me: let's blame the weather, which at least we can see coming.

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